The document provides an introduction to entrepreneurship including definitions of an entrepreneur from various sources, characteristics of entrepreneurs, types of entrepreneurs, and factors influencing entrepreneurship. It defines an entrepreneur as an individual who takes risks to start a new business venture and discusses internal factors like personal characteristics and external factors in the political, social, economic, technological, and legal environment that influence entrepreneurship. It also outlines reasons for the growth of entrepreneurial activity in India such as new technologies, deregulation, and increasing demand for variety.

1. INTRODUCTION TO
ENTREPRENERSHIP
Dr.R.Megavannan

2. •Entrepreneurship comes from a French word
`Entrependre’ and the German word
`Uternehmen’ both meaning individuals who are
`undertakers’ i.e. those who took the risk of a
new enterprise.

3. MEANING
An entrepreneur is an economic change
agent with knowledge, skills, initiative, drive
and spirit of innovation to achieve goals

4. DEFINITIONS
• According to Economists → An entrepreneur one who brings
resources, labour, material and other assets into combination to
produce a socially viable product, and also one who introduces
changes, innovation and new order.
• According to Management → A person with a vision and action plan
to achieve it is an entrepreneur.

5. • Peter F. Drucker: An Entrepreneur as one who always searches for
change, responds to it and exploit it as an OPPORTUNITY. Innovation
is the specific tool of entrepreneurs, the means by which they exploit
change as an opportunity for different business or service.
• Arthur Dewing: An Entrepreneur as one who promotes IDEAS into
business.
• Robert D. Hisrich: An Entrepreneur is the person who will establish a
successful new business venture. Besides, he must also be a
VISIONARY-LEADER – a person who has great dreams.
• Martin Luther king: An Entrepreneur should have a DREAM and work
against all obstacles to achieve it.

6. • Hagen. E: An Entrepreneur is an economic man who tries to maximize
his profits by innovations and PROBLEM SOLVING.
• The New Encyclopedia Britannica: An Entrepreneur is an individual
who bears the risk of operating a business in the face of UNCERTAINTY
about future conditions.

7. CHARATERISTICS OF AN ENTREPRENEUR
• Vision – He is able to visualize market demand, socio-economic
environment and the future of business venture.
• Knowledge – He has sound conceptual knowledge about all the
technicalities of his business.
• Desire to succeed – He has multiple goals and a seeks opportunities
to be productive.
• Independence – He is independent in work and decision making

8. • Optimism – He knows how to exploit opportunities.
• Value addition – He does not follow the conventional rule of thumb, they
have a desire to create, innovate and add value.
• Initiative – He takes the initiative to make an action plan from limited
resources.
• Goal setting – He sets realistic goals.
• Problem solver – He is creative in problem solving.
• Good human relations – He is a good leader, motivator and team builder.
• Communication skills – He has the ability to persuade others.

9. TYPES OF ENTREPRENEUR
• i) According to Clarence Banhof →
• ♦ Aggressive/Innovative entrepreneur – The one who uses various
combinations of information and factors of production to assemble and
engineer new and innovative products.
• ♦ Immitative/Adoptive entrepreneur – The one who simply adopts a
successful innovation introduced by other entrepreneurs.
• ♦ Fabian entrepreneur – The one who is timid and cautious in making bold
decisions. Such an entrepreneur adopts innovations in his business only
when he fears that not innovating may damage his business.
• ♦ Drone entrepreneur – A drone entrepreneur is one who refuses to adopt
new innovations even at the cost of reduced returns.

10. • (ii) According to Authur H. Cole →
• ♦ Empirical entrepreneur – An entrepreneur who does not innovate
and follows the rule of thumb.
• ♦ Rational entrepreneur – An rational entrepreneur is one who keeps
himself updated with his business, the market and economic
conditions, and introduces revolutionary ideas.
• ♦ Cognitive entrepreneur – An entrepreneur that seeks advice and
services of experts to make changes which are revolutionary and
reflect a complete shift from its existing structure.

11. • (iii) According to Ownership →
• ♦ Public entrepreneurship – These are individuals who partner with
the government to create enterprises which serve the public in
innovative ways.
• ♦ Private entrepreneurship – These entrepreneurs are profit oriented
and do not enter market which have low monetary rewards
associated with it.

12. • ♦ Large scale entrepreneur – Large scale entrepreneurs are usually
found in developed countries. These entrepreneurs introduce
revolutionary ideas and are able to sustain high profits and develop
new technologies as they possess the financial capacity and necessary
resources to do so.
• ♦ Small scale entrepreneur – Small scale entrepreneurs do not have
the necessary funds and technology to initiate large scale production
and introduce revolutionary ideas.

13. • Entrepreneurs and Intrapreneurs vary in their level of focus. Whereas
an entrepreneur envisions a company from start to finish, an
Intrapreneur has a much broader vision for an established company.
Because the Intrapreneur works on solving bigger issues within the
business, he typically has more directly applicable skills for given tasks
and takes more risks within the context of his job.

14. • Intrapreneurs and Experimentation
• Similar to how entrepreneurs experiment, an intrapreneur possesses
the freedom and autonomy for professional growth. An intrapreneur
has the independence to analyze and understand trends necessary
for planning the company’s future. Intrapreneurs synthesize their
findings and determine methods for staying ahead of their
competitors.

15. • Intrapreneurs become a company’s executive leaders over time. They
move the business forward and rise to the top as they understand the
business from all levels. A company should recognize and promote
successful intrapreneurs so the business can succeed and grow. When
intrapreneurs work at solving problems, they foster the growth of
other talented intrapreneurs and integrate processes for the greater
good of the entire company.

16. Differences Entrepreneur Intrapreneur
Dependency
An entrepreneur is independent in his operations An intraprenuer is dependent on the entrepreneur, i.e. the
owner.
Raising of Funds
An entrepreneur himself raises funds required for the enterprise. Funds are not raised by the Intrapreneur.
Risk
Entrepreneur bears the risk involved in the business. An intraprenuer does not fully bear the risk involved in the
enterprise.
Operation
An entrepreneur operates from out side On the contrary, an intraprenuer operates from within the
organization itself.
Orientation
An entrepreneur begins his business with a newly set up
enterprise.
An intrapreneur sets up his enterprise after working someone
else’s organization.
Experience
As an entrepreneur establishes new business, so he does not
possess any experience over the business.
An intrapreneur establishes his business after gathering
experiences through working in the other organizations.

17. Factor Influencing Entrepreneurship

18. INFLUENCING FACTORS

19. INTERNAL FACTOR
Demographic
Variables
Personal
characteristics
Social
factors
· Age
· Gender
· Birth Order
· Education
· Ethnic background
· Nationality
· Technical expertise
· Managerial expertise
· Entrepreneurial expertise
· Leadership skills
· Personal values
· Parental role models
· Cultural role models
· Family support
· Community
Personality traits Cultural Factors Environmental factors
· Need for achievement
· Focus of control
· Risk taking
· Tolerance ambiguity
· Need for independence
· Individualism/Collectivism
· Uncertainty avoidance
· Materialism
· Dynamism
· Lack of employment
opportunities
· Little opportunity for
advancement
· Economic resources
· Political climate

20. External Factors
1. Political Environment
 Entrepreneurs will invest only where there is political stability
 Andhra Pradesh and Karnataka are able to promote
entrepreneurship effectively and many new entrepreneurs are
starting their venture there
2. Social and Cultural environment
Family environment, social and cultural environment are closely
related
The social status counts a lot while making the choice of a
career

21. 3. Economic Environment
(a) Whether a person has ancestral property or property earned on his own
(b) details regarding current income
(c) standard of living and
(d) financial status that he enjoys
Macro Level Factors
(a) Market structure
(b) Competition
(c) Profitability
(d) Investments
(e) Availability of land
(f) Capital
(g) Labour
(h) Raw materials
(i) Market

22. 4. Legal Environment
There are laws, rules and regulations framed by various Acts under
the Constitution which have to be followed by entrepreneurs
5. Technological Environment
The future is heavily weighed in favour of knowledged base business.
The new entrepreneurs must have knowledge about the last technological
developments and also should be able to predict the life of the technology

23. Entrepreneurial Environment
In upcoming economies across the world, interest in entrepreneurship is
presently more than ever due to burgeoning youth population and a desire to
move up the value chain.
Three major components are identified in this environment that community
leaders need to address −
1.Culture
i). Appreciation of the values
ii). Welcoming entrepreneurs
iii). Accepting failure
iv). Willingness to motivate
v). Unconditional support

24. 2. Infrastructure − Moving beyond the traditional notion of layout to involve
traditional and non-traditional leadership strategies. For example, educational
institutions like community schools, colleges and regional universities, cultural and
recreational resources, quality schools, and social enterprises that are different and
stress on creativity
3. Entrepreneurial support elements -This involves providing services like i).the
Chamber and Small Business Development Centers,
ii). Help centers,
iii). Counseling office,
iv). Networking organizations and opportunities,
v).Financing programs,
vi). Business incubation services,
vii).Mentoring and coaching, and
viii). Youth entrepreneurship education in and outside the schools.

25. Reasons for Growth of Entrepreneurial Activity in
India
• 1. Industry Structure:
Performance, in terms of economic growth, is shaped by the
degree to which the prevalent industry structure efficiently utilizes
scarce resources. Technological changes in the first three quarters of
the previous century had favoured the performance of large centralized
units.
• 2. New Technologies:
This factor is related to the changes in industry structure.
Fundamental changes in nature of technological development have led
to diseconomies of scale.
Small technology-based firms are now able to challenge larger
companies still dependent on economies of scale

26. • 3. Deregulation and Privatization:
Small firms are dominant in the increase of entrepreneurial
activity in sectors that have been recently deregulated.
The collapse of communism in Eastern Europe has led to thriving
entrepreneurship in the new free-market economies
Even in the rest of the world, conservative economic policy has
given way to a brave new approach that has led to broad level
deregulation across industries.
Now companies have to deal with less licences and fewer
government controls. Many state-owned enterprises have also been
privatized leading to a greater role for the private sector in general and
entrepreneurs in particular.

27. 4. Formation of New Business Communities:
Efficiencies across markets, primarily resulting from use of new
technologies, have led to declining cost of transactions.
Business exchanges such as alibaba.com help smaller firms to be
competitive. This promotes setting up of new firms in the new-age
business communities.
5. Increasing Demand for Variety:
Increased wealth has led to increase in the demand for variety
The increasing demand for new products is of advantage to smaller
firms.
Changes in consumer tastes are a major reason for growth of
entrepreneurship.
People are inclined to products that are specifically designed to
meet their special needs.

28. 6. Services Sector:
Increase in per capita income leads to a greater share of the
services sector in the national economy.
Interestingly, even for some developing countries such as India,
services account for over half of the total GDP.
Growing importance of services in the overall economy has
paved the way for entrepreneurial activity.
7. Government Incentives and Subsidies:
In India, there are incentives being given by both the state and
central government.
Many of the incentives are often sector specific, being given by
the concerned ministry.
Similarly, entrepreneurship is being encouraged in many
countries with a variety of incentives such as tax breaks, preferred
sourcing or grants.

29. 8. Increasing Flow of Information:
Information is the lifeblood of business. Information is being
increasingly democratized. The Internet has become the chief source of
varied information.
Search engines such as Google and Yahoo enable you to access
information from trade bodies, academic or research institutions, news
networks, corporate sites, etc.
9. Easier Access to Resources:
Today, it is easier for an entrepreneur to access debt and equity
finance than ever before. Not just capital, most other factors of
production are now easily available to entrepreneurs.
With greater flow of information, it is easier to contact and to
deal with resource providers such as raw material suppliers and dealers
of capital goods.

30. 10. Entrepreneurial Education:
Many universities and institutes are nowadays offering
entrepreneurship education. A number of institutes have set up
successful entrepreneurship centres, which provide help to budding
entrepreneurs by conducting formal training and structured mentoring
programmes.
11. Return on Innovation:
Strengthening of Intellectual Property Rights (IPR) has acted as a
major boost to entrepreneurs willing to take a risk on an innovation.
Now they feel the confidence in the sanctity of their IPR without feeling
the need to be backed up by a large corporation

31. 12. Entrepreneur as a Hero:
People like Dhirubhai Ambani and Narayan Murthy have become
heroes to the middle class. The common man reveres them as super-
achievers. There is something glorious in the tale of their struggle to
create new and enduring businesses that inspire a lot of other people.
13. Rising Dissatisfaction at Job:
Employers are finding it hard to retain talented employees.
People now have confidence in their abilities, which in turn prompts
them to find alternate employment.
For example, the BPO sector in India witnesses employee
turnover rates in excess of 60 per cent per annum.

32. 15. Acceptance of Ex-entrepreneurs in the Job Market:
Companies are willing to re-employ people who have been
entrepreneurs.
Their experience in creating and starting a new enterprise is highly
valued by many employers.
As a result, a potential entrepreneur perceives a lower risk as there is
always the security of a well-paid job in case the venture does not fare
well.

33. Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006
• The Government of India has enacted the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006 on June 16, 2006
which was notified on October 2, 2006. With the enactment of
MSMED Act 2006, the paradigm shift that has taken place is the
inclusion of services sector in the definition of Micro, Small and
Medium Enterprises, apart from extending the scope to Medium
Enterprises.

34. Definition of Micro, Small and Medium
Enterprises:
• The MSMED Act, 2006 defines the Micro, Small and Medium
Enterprises based
• (i) on the investment in plant and machinery for those engaged in
manufacturing or production, processing or preservation of goods
and
• (ii) on the investment in equipment for enterprises engaged in
providing or rendering of Services.

35. The guidelines with regard to investment in plant
and machinery or equipment as defined in the
MSMED Act, 2006 are
Nature of activity of
the Enterprise
Investment in plant and
machinery excluding land and
building for enterprises
engaged in manufacturing or
production, processing or
preservation of goods
Investment in equipment
excluding land and building
for enterprises engaged in
providing or rendering of
services (loans up to Rs 1
crore)
Micro Not exceeding Rs.25.00 Lakhs Not exceeding Rs.10.00 Lakhs
Small More than Rs.25.00 lakhs but
does not exceed Rs.500.00
lakhs
More than Rs.10.00 lakhs but
does not exceed Rs.200.00
lakhs
Medium More than Rs.500.00 lakhs
but does not exceed
Rs.1000.00 lakhs
More than Rs.200.00 lakhs
but does not exceed
Rs.500.00 lakhs

36. Key highlights of the MSME Sector:
• MSMEs account for about 45% of India’s manufacturing output
• MSMEs accounts for about 40% of India’s total exports
• The sector is projected to employ about 73 million people in more than 31
million units spread across the country
• MSMEs manufacture more than 6,000 products ranging from traditional to
high tech items
• For FY11, total production coming from MSME sector was projected at `
10,957.6 billion, an increase of more than 11% over the previous year
• For FY12, the MSME sector is estimated to have an average credit off-take
of ` 7.16 lacs for 32.2 million units.

37. Key Challenges faced by the MSME Sector:
• Lack of availability of adequate and timely credit
• High cost of credit
• Collateral requirements
• Limited access to equity capital
• Procurement of raw material at a competitive cost
• Problems of storage, designing, packaging and product display
• Lack of access to global markets
• Inadequate infrastructure facilities, including power, water, roads
• Low technology levels and lack of access to modern technology
• Lack of skilled manpower for manufacturing, services, marketing, etc
• Multiplicity of labour laws and complicated procedures associated with compliance of
such laws.

38. Characteristics of Small –Scale Enterprises
• Labour Intensive
• Flexibility
• Innovative
• Decentralisation
• Outlet of Entrepreneurial Spirit

39. Significance of Small- Scale Entrprise
• Utlise locally available human and material resources and expertise/
experience
• Create jobs at relatively low cost
• Improve the lifestyle and living standard of people
• Diversity the industrial structure
• Help I increasing the national productivity
• Contribute approximately 35 to 45% of export
• Prevent the creation of monopoly

40. • Ensure more equitable income distribution
• Attract the utilize indigenous entrepreneurship and encourage
woman entrepreneurs
• Develop a pool skilled and semi- skilled workers as a basis of future
industrial expansion
• Prevents regional imbalance by their presence in backward, rural, and
exterior most part of country
• Adapt appropriate technological managerial approaches optimally
• Facilitate a favorable balance of trade

41. Role of Small- Scale Enterprises in Economic
Development
• Employment Generation
• Higher productivity
• Poverty Alleviation
• Better Utilization of local resources
• Tapping of savings
• Utilization of domestic technology
• Regional balance and rural development
• Export contribution
• Contribution to decentralization
• Complimentary to large-scale industries.

42. Prime Minister Employment
Generation Programme • A credit linked scheme to facilitate
participation of financial institutions
for higher credit flow to micro sector
• Its objectives are to generate
continues and sustainable
employment opportunities in rural
and urban areas of the country
through start-ups.

43. National Manufacturing
Competitiveness
programmes
To promote growth oriented enterprise interventions like lean
manufacturing, design clinic, quality management systems etc

44. To promote Innovation & Rural
Entrepreneurship through rural livelihood
incubator, technology business incubator
and fund of funds To establish
Technology Centre Network to promote
Innovation, Entrepreneurship and Agro-
Industry

45. Scheme of Fund for
Regeneration of
Traditional
Industries(SFURTI
Making traditional Industries more
productive and competitive by organizing the
traditional Industries and artisans into
clusters

46. Performance & Credit
Rating Scheme
To create an eco-system of MSEs for easier/
cheaper access to credit for the rated
enterprises. The rating done for MSEs
generates an awareness about the strengths
and weaknesses of the operations and
creditworthiness of the enterprise.

47. Assistance to Training
Institution
To promote entrepreneurship and skill
development through capital grant for
creation/strengthening of infrastructure and
programme support for conducting
entrepreneurship development and skill
development programmes

48. Marketing Assistance
To assist MSMEs to organise/ participate in
exhibition of their products and services in
domestic and global markets. Organizing
Buyer-Seller Meets, Intensive Campaigns and
Marketing Promotion Events are also
included

49. Credit Linked Capital
Subsidy Schemes(CLCSS)
To enable micro and small enterprises to
adopt modern technology to improve their
productivity

50. Coir Udyami
Yojana(CUY)
To offer credit-linked subsidy to enterprises
in coir sector

51. Coir Vikas Yojana(CVY)
For adoption of strategic and aggressive
product specific and market specific
promotional programmes for popularizing
coir and coir products in markets abroad

52. Mahila Coir
Yojana(MCY)
To assist women workers in coir sector to
adopt modern technology and enhance
productivity.

53. Credit Guarantee Fund
Scheme assists MSEs
(CGTMSE)
To get collateral free credit from financing
institutions. Banks and financial institutions
are provided funding assistance under this
scheme so that they can in turn lend
collateral free credit to MSMEs

54. Micro and Small
Enterprise Cluster
Development
programmes(MSE-CDP)
MSME Cluster Development programmes
aims to enhance and develop cluster
infrastructure projects for facilities such as
power distribution,water,telecommunication
etc

55. Tool Rooms
Technology Development Centres are
providing skilling on cutting edge technology
to youths and MSME to face the challenges
of Globalisation, through technology
upgradation

56. International
Cooperation
IC to promote MSMEs to acquire new
markets overseas and exchange business
delegations

57. Surveys, Studies &
Policy Research
Schemes Opportunity for
Organisations/Institutions conduct studies
and surveys encompassing various facets of
enterprise creation and policy eco-system

58. WOMEN ENTREPRENEURS
• Definition:
“Women or a group of women who initiate, organize and run a
business enterprises.”
Government of India:
“An enterprise owned and controlled by a women having a
minimum financial interest of 51% of the capital and giving at least 51%
of the employment generated by the enterprise to women. ”

59. Role of Women Entrepreneurs in society
“ When women moves forward, the family moves, the village moves,
and the nation moves.”
- Pandit Jawaharlal Nehru
1. Employment Generation
2. Economic Development
3. Better Utilization of Resources
4. Improved Quality of Life

60. Steps to Encourage Women Entrepreners
• The Government od India and NGOs promote various schemes .
• National Alliance of Young Entrepreneurs ( NAYE) which assists women
entrepreneurs in:
i) Providing access to capital, infrastructure and markets
ii) Development of management and production capabilities
iii) Identifying investment opportunities
iv) Sponsoring, delegating, participation in trade fairs, exhibitions,
arranging buyer-seller meets and specialized conference, etc.,
v) Organizing seminars, workshops and training programmes
vi) Lobbying for them in Press, Parliament, State legislatures and etc

61. • SIDCO and NSIC which loans up to Rs. 25 lakhs will be given to the
entreprenerur without insisting on collateral security
• Commercial bank also have ‘Women entrepreneur Cells’ to extend
financial assistant to wome.
• The IDBI has set up the Mahila Udyam Nidhi (MUN) and Mahila Vikas
Nidhi(MVN)
• MUN provides 15% equity assistance for new project, its cost not
exceeding Rs. 10 lakhs
• Indira Mahila Yojana(IMY) was launched in August 1995 to give
education, awareness, income generation capacity
• Rashtriya Mahila Kosh(RMK) was established in 1992 with a fund of
Rs. 31 cores to meet the needs of poor women by giving them loans.

62. • Indian Mahila Block Societies (IMBS) provides training, apprenticeship
and orientation programmes for trainees.
• Norwegian Agency for International Development(NORAD) was
established in 1993 to help educated and uneducated women
financially in non-traditional areas of business.
• ARVIND was started by National Bank for Agriculture and Rural
Development(NABARD). It provides loan up to Rs. 10 lakhs to women
who work collectively agriculture

63. Problems of Women Entrepreneurs
• Problems of Finance
• Limited mobility
• Lack of Education
• Male dominated society
• Low risk-bearing society
• Social Recognition

64. Rural Entrepreneurship
• Definition:
“any industry located in a rural area, the population of which does not
exceed 10,000, which produces any goods or renders any services with or
without the use of power and which the fixed capital investment per head of an
artisan or a worker does not exceed Rs.1000”
The definition has been modified with population ceiling of 20,000
Investment upper limit of Rs. 3 cores

65. Classifications of Industry
• Mineral
• Forest
• Agro
• Polymer and Chemical
• Engineering and non-conventional
• Textiles including Khadi
• Service Industry

66. Importance of Rural Entrepreneurship
• The reduction in migration of rural to urban areas
• Balanced regional growth
• Reducing rural-urban gab
• Increasing rural income
• Reducing the heritage of the country
• Reduction the urban pollution
• Higher economic growth

67. Problems of Rural entrepreneurship
• Domination of agricultural mindset
• Lack of education with low literacy
• Poor infrastructure
• Lack of information
• Lack technical knowhow and skilled labour
• Lack of quality control
• Attitude of people with mistrust of new comers
• Language barriers

68. • Primitive and low technology
• High input cost due to transportation
• Management problems
• Lack of storage and warehouse facilities
• Inadequate finance and credit
• Lack of awareness and knowledge about the opportunities
• Preference for salaried jobs then self-employed

69. BUSINESS IDEA GENERATION TECHNIQUES
A Business idea is a business seed, which expands and grows into a
business tree.
Sources of Business Ideas:
1. Technical Sources
2. Market Sources

70. • Technical Sources:
- Ideas are generated within the company
i). Scientists working Research and Development department
ii). Engineering working in the production department
iii). The field staff who may get new ideas while solving problems
These ideas relate to the
a). New methods to be adapted for production
b). New product development
c). New machinery

71. Business Ideas from Market source
1. Focus Groups
2. Brainstorming
3. Reverse Brainstorming
4. Rawlinson Brainstorming
5. Problem Inventory Analysis
6. Synectics: personal, direct, symbolic and fantasy
7. Gorden Method
8. Checklist Method
9. Free Association

72. 10. Forced Relationship
11. Collective Notebook Method
12. Heuristics
13.Scientific Method
14. Value Analysis
15. Attribute list
16. Matrix Charting
17. Big-Dream Approach
18. Parametric Analysis
19. Morphological Analysis
20. Hitchhiking

73. 21. Creative listening
22. Trigger Sessions
23. The Taguchi Method

74. Market Entry Strategy
A market entry strategy is the planned method of delivering
goods or service to new target market and distributing them there.

75. Market Feasibility
1.Product
-description of product, size , packing, brand or trade name,
product mix, PLC
2.Supply
-current sources of supply, capacity of supplying companies.
- product range, estimated market share
3.Demand
4. Marketing Strategy
-target markets, competitive advantage

76. 5. Pricing
6. Projected Sales and Market Share
7. Competition
8. Distribution
9.Marketing Organisation
10. Sales Promotion/ Marketing Support
11. Marketing Agreements

77. Stages of New Product Development
• Idea Generation
• Screening
• Concept Development and Evaluation
• Business Analysis
• Product Development and Evaluation
• Development and Evaluation of Marketing Mix
• Test Marketing
• Commercialization of the Product

78. Financial and Economic Feasibilities
• Financial feasibility analysis involves assessing the financial viability of
an enterprise. It also includes estimation of cost as well as review of
profit and loss account, break-even point, cash flow statement,
balance sheet, and sales plans
• Financial feasibility analysis also determines the requirement of
funds, sources of obtain funds, and ways to utilize these funds.

79. Methods of Evaluation of Financial Feasibility
1. Cost of Production and Marketing
2. Break Even Analysis
3. Assessment of Fixed and Working Capital Requirement
4. Capitalisation
5. Sources of Finance
6. Cost of Capital
7. Capital Structure
8. Hire Purchasing and leasing

80. 9. Venture Capital
10. Export Finance
11. Factoring and Bill discounting
12. Overdraft
13. Cash Credit

81. Requirement of funds at different stages
1. Early-stage financing
a). Seed Capital
b). For start-up
2. Expansion or three Development financing
a). Working capital
b). Major expansion of company
c). Public offer
3. Acquisitions financing

82. Technical Feasibility
• Technical feasibility is also known as techno-economic feasibility.
• The technical study evaluates the choice of technology, production
process, and location of business.
• The contribution of engineers and technicians is quit high in this stage
of evaluation

83. Methods and Evaluation of Technical
feasibility
1. Technology Analysis
2. Raw Material Analysis
3. Make or Buy Decision
4. Plant Size and Location
a). Market Oriented Location
b). Material Oriented Location
5. Layout
6. Cost-benefit Analysis

84. Legal Feasibility
• An entrepreneur should have at least the working knowledge of the
basic business laws governing factories, taxation and companies.
• An entrepreneur has to follow the rules and regulations as laid down
in the various acts as follows

85. • The Indian Companies Act, 1956
• Monopolies and Restrictive Trade Practice Act,1969
• Industrial Act,1947
• Foreign Exchange Regulation Act, 1973
• Foreign Exchange Management Act, 1993
• Income Tax Act, 1961
• Factories Act, 1948
• The workman’s Compensation Act, 1923
• Trade Union Act, 1926
• Minimum Wages Act, 1948
• Employees State Insurance Act, 1948

86. • Employment Provident Fund Act,1952
• Payment of Bonus Act, 1965
• Essential Commodities Act, 1955
• Drugs and Cosmetic Act, 1940
• Consumer protection Act, 1986
• Export and Import Act, 1947
• Excise Act,1944
• Sales Tax Act, 1956

87. Mangerial Feasibility
• As per Indian Law, there are four main ownership forms of
organisations. Those are long term critical decision as they determine
the risk, responsibility and control of the entrepreneur as well as the
division of profits.
1. Sole proprietorship
2. Partnership
3. Joint Stock Company
4. Co-operative Societies

88. Business Model
• Meaning
Description of means and methods a firm employs to earn the revenue
projected in its plans. It views the business as a system and answers the
question, “ How are we going to make money to survive and grow?”

89. Business Plan
• Meaning:
A Business plan refers to a formal statement of plans of an
enterprise. It explains business goals of the enterprise and means to
achieve those goals.
Definition:
“ It’s a document that convincingly demonstrates that your
business can sell enough of its product or service to make a satisfactory
profit and to be potential backers
- David Gumpert.

90. Users of Business Plan
Business Plan
Insider
Entrepreneur/Management
Team
Employers
Outsider
Suppliers Customers
Inverstors

91. Writing a Business Plan
Elements
of Business
Plan
Title Page
Table of
Content
Executive
Summary
Description
of Venture
Market Plan
Equipment
and
Materials
Description
Market Plan
Operation
Plan
Management
and
Organization
Plan
Financial Plan
Contingency
Plan

92. Sample of a Business Plan
1. Summary
What is being proposed
Product/ Service
Ownership
Project Cost
What is required
Funding Pattern
Assistance regarding technical collaboration
2. Introduction
Current industrial status in the country
Current industrial status in the international prospect
Grounds for project selection
3. About the Promoter
Educational background, work experience, project related experience
4. About the Project
Description of product and its use
Installed Capacity
A write up on what will distinguish the proposed project and others

93. Description about legal requirements
Clarence from Government
5. About the Location
Exact location of the project
Various alternatives available which have been examined
Criteria for selecting location
Locational advantages including infrastructural facilities
6. Land and Building
Area of Land
Constructed Area
Type of Construction
Cost
7. Plant and Machinery
Capacity
Equipment Balancing
Supplies
Cost
Various alternative available
Criteria for selecting the proposed equipment
8. Miscellaneous Assets
Nature of miscellaneous assets e.g, AC, office automation
itemized description of such assets along with cost and source of procuring

94. 9. Production Process
Description of production process
Process Flow chat
Details of technology
10. Has the technology been developed indigenously?
11. What are the arrangement for technical know-how?
12. What are the technology alternative available?
13. How these alternative have been evaluated?
14.What are the possibilities of change in the tehcnology in the course of time?
15. Various Process parameter
16. Production Program
Time required to make one unit of the product
How much/ how many in one week, one month, first year, second year, and so on up to 10 years.
Input-Output ratio
Any national and international standards
17. Raw Material
List of Raw material needed
Quality required for one unit of output
Quality specification
Sources of procurement
Cost of raw materials
Supply position

95. 18. Utilities:
Requirments of power,water, steam, compressed air and etc;
Source of said materials
Position regarding availability
19. Manpower
Requirement of skilled, semi skilled personal
requirement of administrative/ managerial staff
Cost of Manpower
20. Market
A. Current Market status:
What are the major end user of product?
Who are the major buyer?
What are the trade channels?
How the product are differentiate from other product? Etc;
B. Proposed approach towards marketing
Geographical area
Distribution Channels
Trade Practice
21. Working Capital Requirement

96. 22. Requirement of Funds
23. Cost of Production
24. Cash Flow Statement
25. Break-Even Analysis
26. Implementation Schedule

97. Identifying the Sources of Finance
An enterprise raises funds for different purposes depending on
the time period ranging from short to long duration. The total amount
of financial needs of an enterprise depends on the nature and size of
the business.

99. Banking Institutions providing Financial Assistance
• Working Capital Finance
• Corporate Term loans
• Deferred Payment Guarantees
• Project Finance
• Structured Finance
• Traders Loan
• Export and Import Finance
• Advantage against Shares